[BIP-24] Allocate BAL to a Ribbon Finance Vault

If you want to run polls, you are welcome to make polls.

I don’t support any management of this strategy by the Treasury subDAO. One nice feature of Ribbon is strike prices are chosen automatically. I am against injecting human bias into this equation as I see no reason to think that is +EV.

This is a simple “Allocate 500k BAL to a Ribbon vault to sell call options every month 25% out of the money using cash settlement”. I’ve seen nothing in the discussion to indicate a change to my base case I outlined in the OP.

Anyone is free to take this up and continue down the path suggested by Long Juan. It just won’t be me as I’ve done all the work I plan to do for this.

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Apologies, I assumed that you brought up the possibility of 25% vs 50% and 500k BAL vs 250k BAL for discussion. Seems like that’s not up for discussion and the proposal is to move 500k for 25% indefinitely? It would bring up the question of why mention options if options aren’t to be decided on.

The downside of not doing a temperature checks is that if the vote fails, we won’t know if voters were categorically against it or there were specifics they did not agree with (a case all too familiar with the Hexagon vote).

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It is up for discussion. Reading the replies, I see Xeonus suggesting it but saying he’s slightly in favor as written. Mike B is against but suggests a lower amount (unclear if this change would get him to vote yes). You also I guess suggest a lower amount but again, unclear if you would vote yes if that change was made.

If this is not an accurate summary then I welcome those involved to clarify their positions.

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Although your summary may be accurate, the method of summarizing vs simply polling might not be as efficient. The least it’ll do is allow you to see others who are participating in the discussion think about the parameters aside from the individuals you mentioned.

Polling and temperature checks are common practice, perhaps because they have proven to be helpful. Otherwise, I do not suggest the imposition for the sake of doing so.

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Nice proposal @solarcurve!

@chudnovglavniy, glad to see you here, I am also a governance lurker and voter on Ribbon.

Two questions for you:

  1. As suggested by @zekraken, would it be possible to setup a vault that execute a bear call spread strategy instead of a simple covered call strat (i.e. simultaneously selling a call and purchase another call with a higher strike price) and setting the parameters in a way cap our capital loss per round at let’s say 10% [TBD]? If so, can you provide similar historical strategy P&Ls for such a strategy at a 5%/7.5%/10% max capital loss per round.

  2. Could we use weekly call instead of monthly? That would allow the treasury team more flexibility to pause the strategy if the view on the market change.

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  1. We are working on credit spreads, but it is not production ready yet.

  2. We can do weekly instead of monthly. All of our retail vaults are weekly. But we did the math and found that monthly expiry aligns better with treasury strategy (unlike retail participants). Yes it would allow more flexibility, but monthly allows for further out of the money strikes where weekly unsustained rallies don’t make a difference.

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This will head to snapshot tomorrow probably unless some discussion picks up in the next 18 hours.

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https://snapshot.org/#/balancer.eth/proposal/0x54d9df33e17f3cf2cc8259b356be2d80b79129c092001df89dcdd8d2fa3d44c4

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Two pieces of feedback I’ve heard:

  • Option to choose a smaller starting deposit

  • Stakeholders support using Ribbon but don’t have veBAL because of Aura’s imminent launch

Thus, you might find this proposal is sent to the Governance Council for round 2 at some point in the future with more voting options.

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Thank you @solarcurve

The more stakeholders vote, the better. I also think a move away from „take it or leave it“ votes is a great improvement, meaning vote options will give us more flexibility to find common ground :pray:t2:

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Thanks for the update.

With a smaller deposit, we would reconsider our stance. A poll with a few deposit options might be useful maybe?

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Raising this from the graveyard of failed proposals for one more try. A few things have changed:

Please see the below poll which will inform the voting choices on snapshot. Depending on how skewed the results are, 1-3 options might be included in the vote. I’ll ask the Governance Council to include this in the round that goes out on June 30th. Cheers.

  • 0 BAL (Do not do this)
  • ~3.4% of Treasury (200k BAL)
  • ~6.7% of Treasury (400k BAL)
  • ~10% of Treasury (600k BAL)
  • ~13.5% of Treasury (800k BAL)

0 voters

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Given that the Treasury BAL has increased by 1.9m BAL, I think it’s good to give this strategy a go starting with 3.5% of Treasury’s BAL and scaling it up to 5-6% if the outcome was favorable.

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Agreed with Juan that the increase of BAL in the treasury changes the formula a bit. I would be in favor of starting with 200k BAL as well.

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I think the idea is great in theory, on board with the 200k BAL myself. If we are liking the results in a quarter or some length of time after, revisiting to increase our position could also be feasible. If there is a flaw in injecting more funds in that short of a period of time someone please highlight that for us / me please.

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There is no flaw, I would only point out that past performance is in no way indicative of future results. When you say “if we like the results we’d increase” I don’t understand that logic really. If anything I’d argue the opposite should be the case - if we see a string of poor results, like Jan → May '21 for example, that would be a sign to increase exposure to this strategy anticipating a reversion to the mean in returns.

Either way, whether one believes increasing exposure after positive results or increasing after negative results, this is a purely subjective bias. Proving otherwise (that one way or the other is +EV long term) will be incredibly difficult.

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Valid point, very difficult to crystal ball these things out. To keep it simple on my end I would say I am in support of the lowest tier for now. Re-evaluation down the road for a change (either direction) is welcome for me as well. :slightly_smiling_face:

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Ultimately I still don’t feel this strategy is worth it at these market levels, however I am cool with being wrong. If the majority of the community wants to have a go at it I could get onboard with experimenting since the treasury base was recently increased. 200k isn’t a large % of the BAL and this could potentially lead to having another stream of stables which we’ll definitely need going forward.

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https://snapshot.org/#/balancer.eth/proposal/0x00761b3668d93e1e5bf81eb29d03b04b8493f493577cd041cb8cb8d5b27260f6

Update from the Ribbon team:

First auction went smoothly, you collected 18K USDC to your multisig. Ethereum Transaction Hash (Txhash) Details | Etherscan

This was a 3 week expiry (Jul. 8 - 29) since market makers only do last friday of every month for monthlies. A full month expiry would have gotten ~27K USDC in premiums - we are running monthlies from now on so that number should be more representative moving forward.

You can check out vault status here Ribbon Finance: Decentralised Crypto Structured Products

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